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How to Cope With Financial Stress in a Time of Uncertainty

By Christy Bieber – Apr 19, 2020 at 8:10PM

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Read this if the coronavirus pandemic is causing you to worry!

Coronavirus has essentially shut down the American economy, leaving millions of Americans with no jobs and causing lots of volatility in the stock market. Almost everyone, during these troubled times, is coping with unprecedented financial stress, which can be bad for your health.

You don't have to spend your time worrying, though. There are proven techniques for coping with financial stress that will help you get through this crisis.

Couple looking at financial paperwork with dismay.

Image source: Getty Images.

Take stock of your situation

Determining why you're stressed -- and if that concern is warranted -- is half the battle when it comes to managing your worries. When you understand your starting point, you can also begin to develop a plan to improve any problematic situations. 

If you've lost your job, for example, you need to assess what income sources are still available to you, such as unemployment funds, your government stimulus check, and your emergency fund.

Or if your retirement investment account has gone down, you need to determine if it's just because of the market downturn (so it's likely to recover as economic conditions improve), or if there's a larger problem such as improper asset allocation, or the companies you're invested in no longer have a sound business strategy. 

Once you've identified your sources of worry, take a broad look at your big financial picture to see if there are any mitigating factors.

Losses in your retirement account, for example, may not be such a big deal if you have 30 years to retirement and you still have a good income, so you can keep making contributions. Or a job loss may not be as big of a problem if you have a hefty emergency fund and your unemployment benefits cover your bills. 

Plan for the worst-case scenario

Economic uncertainty can make even people who are in a good financial position worry about the future. So take some time to indulge those concerns.

Think about what would happen, for example, if you were out of work for a year and you couldn't get another job, or if your retirement account balance took 10 years to recover. Then, determine what you'd do in these worst-case scenario situations.

You might consider starting a business, looking for a side hustle, going back to school, transitioning career fields, cutting spending to make unemployment benefits last longer, claiming Social Security early, or doing any number of different things to keep going.

As you figure out what to do in a dire situation, you may find you have more options than you think, so you don't need to worry as much as anticipated.

You may also decide to prepare for that worst-case-scenario if you can. For example, if you're worried about your retirement account balance recovering slowly, you might decide you want to increase your account contributions now so you'll still have enough money to leave the workforce when you're ready -- even if you're stuck in a bear market for a long time. 

Bulk up your emergency savings

A hefty emergency fund is one of the single best ways to alleviate financial worries.

If you know you have a big pot of cash ready to draw from when you need it, the possibility of a job loss, medical issue, income cut, or other financial disaster likely won't be quite as concerning as knowing you won't be financially prepared to cope with it. 

Avoid acting based on emotions

If you're stressed and afraid, you may be tempted to take rash actions that you later regret.

Whether that's raiding your retirement funds because you've lost your job or selling stocks at a loss, decisions based on emotions often aren't good ones. 

Instead of reacting based on fear, take the time to consider all solutions to any financial problems you might be facing. If you're waiting for unemployment checks to start, for example, you may decide it makes more sense to put expenses on a 0% interest credit card instead of making a withdrawal from your 401(k). 

Accept that bad times come, but remember they'll pass 

The U.S. has been through market downturns, world wars, depressions, and a host of other crises. The market always recovers, and the economy always comes roaring back.

While it may take a little time, and recovery may seem impossible right now with the country shut down, just look back at the history of boom and bust cycles to feel more confident that troubled times are never permanent. 

Financial stress is a fact of life right now -- but you can keep your cool

If you're worried about your money, you aren't the only one. But by making a financial plan, reviewing your financial situation, and reminding yourself that bad times pass, you can hopefully keep your stress to a minimum until the crisis passes. 

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